Farm Bureau opposes fracking tax plan

Saturday

Dec 1, 2012 at 4:00 AM

By MARC KOVACDix Capital Bureau

COLUMBUS -- The state's largest agricultural group is not supporting the privatization of the Ohio Turnpike or Gov. John Kasich's plan to increase taxes on oil and gas production while instituting a corresponding decrease in income tax rates.

Ohio Farm Bureau delegates representing all 88 counties voted to take the opposition stances during the group's annual meeting in Columbus this week -- a meeting that included an appearance from Kasich, who urged the Farm Bureau to support the proposals.

The Farm Bureau maintained its opposition to the potential sale or lease of the Turnpike, a policy position it adopted earlier.

Members also took a position against any plan to increase the severance tax on oil and gas production solely for the purpose of instituting an income tax cut.

Instead, the group said any increase in the severance tax should be used to address local government funding, pay for infrastructure needs and economic development and mitigate negative impacts of oil and gas drilling on communities and the environment, said Joe Cornely, Farm Bureau spokesman.

The group also said changes to the severance tax should be part of a larger, comprehensive reform of Ohio's tax structure.

"If it's going to happen, these are the things that need to be addressed in the discussion," he said.

The governor wants to increase tax rates on oil and gas produce via horizontal hydraulic fracturing, or fracking, an emerging means of extracting fuels from deep underground shale formations by pumping in large volumes of water, chemicals and sand.

The industry is expected to add billions of dollars into the state economy in years to come. Kasich has said the tax changes are needed to ensure some economic benefit for Ohio from big profits expected by out-of-state energy companies.

But some farmers are voicing concern about the plan, because they have sometimes-decades-old contracts in place that require them to pay the severance taxes on production. Others are questioning whether an increase in the severance tax rate would prompt some oil and gas companies to avoid operations in Ohio.

Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.